Olfactomedin 1 (Olfm1) is a conserved secreted glycoprotein expressed preferentially in developing and adult neuronal tissues. In three day-old mice, Olfm1 is most strongly expressed in the olfactory bulbs, anterior olfactory nucleus, thalamus, CA3 region and dentate gyrus in the hippocampus, internal granular layer in the cerebellum, and retinal ganglion cell layer. Since Olfm1 is a secreted protein, we hypothesized that its main targets are extracellular proteins or receptor-like molecules on the cell membrane. We screened for such molecules and identified Nogo receptor 1 (NgR1) as an Olfm1 binding partner. NgR1 together with putative coreceptors (p75, TAY/TROY and Lingo-1) form the Nogo receptor complex. It has been previously shown that several myelin-associated inhibitors, including Nogo-A, the myelin-associated glycoprotein (MAG), and the GPI-linked oligodendrocyte-myelin glycoprotein, may interact with the Nogo receptor complex and inhibit axon regeneration. We demonstrated that Olfm1 binding to NgR1 inhibits activation of intracellular RhoA signaling that leads to the promotion of axon extension in cultured neurons. Elimination of the internal domain of Olfm1 encoded by exon 4 inhibited binding of Olfm1 to NgR1 by 90% compared with wild-type Olfm1. The mutated form of Olfm1 had a reduced ability to promote axon growth in cultured hippocampal neurons as compared with their wild-type counterparts. These results suggest that the central part of Olfm1 encoded by exon 4 is important for its activity and prompted us to investigate Olfm1 mutant mice expressing Olfm1 with a deletion of the internal domain. Mice expressing mutated Olfm1 developed anterior commissures that were thinner, defasciculated, and contained fewer nerve bundles compared to wild-type mice. Hippocampal and olfactory bulb volumes were reduced in the Olfm1 mutant mouse to a level representing 81.9 2.6 and 75.4 5.6% of the wild-type, respectively. The areas of major axon bundles, such as the corpus callosum, anterior commissure, and optic nerves, were even more significantly reduced to 73.7 4.8, 70.7 6.3 and 76.9 6.0% of the control, respectively, indicating that axonal fiber formation is markedly disrupted in the Olfm1 mutant mouse brain. The functional significance of the Olfm1/NgR1 interaction was confirmed in zebrafish embryos by rescue of ngr1 mRNA-induced developmental abnormalities of the anterior commissure by olfm1 mRNA co-injection. These data establish Olfm1 as a novel NgR1 ligand that may modulate the functions of the NgR1 complex in precursor migration, axon growth and branching, and inhibition of axonal regeneration. We suggest that application of Olfm1 or stimulation of its expression may be used to facilitate neuronal growth in vivo after axonal damage or injury. Myelin associated inhibitors and their receptors are associated with different neural diseases, including schizophrenia, amyotrophic lateral sclerosis, multiple sclerosis and Alzheimers disease. A growing number of cases indicate that defects in different proteins that contribute to a common functional protein complex may lead to similar pathologies. It is reasonable to suggest that mutations in Olfm1 may lead to a spectrum of neurological disorders.